These 2 Finance Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks Investment Research highlights its proprietary Earnings ESP (Expected Surprise Prediction) tool as a method to identify stocks with a high probability of beating quarterly earnings estimates. This tool compares the most accurate analyst estimate to the consensus, and when combined with a Zacks Rank #3 (Hold) or stronger, has historically predicted positive earnings surprises 70% of the time, yielding average annual returns of 28% over a 10-year backtest. Currently, Wells Fargo (WFC) with a +0.50% ESP and Travelers (TRV) with an +8.76% ESP are presented as finance stocks exhibiting positive ESPs, suggesting potential upside surprises in their upcoming earnings reports.

Analysis

The Zacks Earnings ESP model has identified two finance sector stocks, Wells Fargo (WFC) and Travelers (TRV), as candidates for positive earnings surprises in their upcoming reports. This quantitative signal is based on the model's historical performance, which indicates a 70% probability of an earnings beat when a stock with a Zacks Rank of #3 (Hold) or better has a positive Expected Surprise Prediction. For Wells Fargo, the ESP is a marginal +0.50%, derived from its Most Accurate Estimate of $1.41 per share versus the Zacks Consensus Estimate of $1.40 ahead of its July 15, 2025, report. In contrast, Travelers exhibits a significantly stronger signal with an +8.76% ESP, reflecting a Most Accurate Estimate of $3.80 against a consensus of $3.49 for its July 17 report. While both stocks carry a neutral #3 (Hold) rank, suggesting expectations for market-in-line performance, the magnitude of TRV's ESP implies a much stronger conviction from recent analyst revisions regarding a potential earnings upside.

Key Decisions for Investors

• Investors employing event-driven strategies could monitor both Wells Fargo and Travelers, as the positive ESP signal flags a heightened probability of a positive earnings surprise for both firms.
• Given its substantially larger ESP of +8.76%, Travelers (TRV) may present a more compelling opportunity for a catalyst-driven trade based on a potential earnings beat compared to Wells Fargo's (WFC) marginal +0.50% signal.
• It is important to weigh the ESP signal against the neutral Zacks Rank #3 (Hold) for both companies, which suggests any position should be viewed primarily as a short-term play on an earnings surprise rather than a shift in long-term fundamental outlook.